Terminating Tax Shelters: Has California Broken the Legislative Logjam?
Posted: 30 Nov 2003
California has enacted some important new reporting requirements and penalties applicable to abusive tax shelters. Among the penalties is a codification of the economic substance doctrine in the form of an enhanced penalty provision. The reporting requirements apply to any tax shelter with a California investor, and thus may be of interest to advisers outside of California. In addition, the California provisions, modeled on existing federal rules, may provide guidance in crafting enhanced federal penalties. This article provides a brief overview of the new California legislation.
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